Real Estate News

Sacramento council to debate new fee for low-income housing

The Sacramento City Council will be asked Tuesday to impose a fee on developers to help build subsidized housing for lower-income residents in new and old neighborhoods around the city.

The fee, $2.58 for each square foot of new construction, is part of the city’s proposal to overhaul its mixed-income housing ordinance. Instead of requiring developers in new areas to include low-income housing in their projects, which is the current policy, most developers would instead pay into a housing trust fund.

The concept mirrors a fee Sacramento County approved last year. Builders support the new ordinance, calling it a balanced approach. But affordable housing advocates oppose it, saying the fee amount isn’t enough to achieve the city’s affordable housing goals.

The council will hold a public hearing on the topic during its 6 p.m. Tuesday meeting at City Hall.

City planners say the new fee, debated for several years, helps make up for some of the loss of redevelopment funding. The state stripped cities several years ago of the ability to capture property taxes for redevelopment, including housing in blighted areas.

It’s uncertain, though, how much the fee will help the city achieve its announced goal of encouraging 10,000 new housing units in the central city in the next decade. The city wants about 4,000 of those units to be affordable to lower-income working people and the poor.

City Councilman Steve Hansen, who represents downtown, said he believes the proposal allows the housing market to grow naturally, and boosts chances of financing some difficult infill development.

“We want to make sure the economy continues to recover,” he said. “I think we’ve hit the sweet spot.”

The North State Building Industry Association, representing major builders in the Sacramento region, supports the new concept.

“The new mixed-income housing ordinance is a significant improvement on the existing policy,” spokesman Ioannis Kazanis said. “Our industry feels it strikes the right balance between encouraging additional investment in the city, while also effectively addressing its affordable housing needs.”

Sacramento Housing Alliance director Darryl Rutherford, however, said he’s disappointed. He said low-income housing developers affiliated with his group believe it would take a fee of at least $9 per square foot to meet the city’s affordable housing needs.

“Our fear is we are not going to see inclusive communities being built,” he said. “We are probably going to see more ... pockets of poverty.”

Rutherford said he will encourage the council to adopt a Planning Commission recommendation that the city publish an annual report detailing how much funding was collected, how the money is spent, where housing is being built and whether the city is meeting its housing goals.